Target’s sales growth hits peak

Target Corporation reported its best quarterly comparable sales growth and online revenue that nearly tripled as customers took advantage of the retailer’s quick and contact-free delivery to shop for clothes, videogames and home decor.

Shares of the Minneapolis-based retailer jumped around 12% to a record high of $153.77 in morning trading after it handily trounced estimates for quarterly profit and revenue.

The surging demand seen at big-box chains at the height of the lockdown caused by the coronavirus pandemic has continued into the second quarter even as restrictions ease, with some U.S. shoppers using their stimulus checks to shop for bigger-ticket non-essentials, such as tablets and beauty products.

“The biggest change we saw from Q1 to Q2 was the exceptional growth we saw in in-store shopping in an environment where many Americans were turning to digital to fulfill their needs,” Chief Executive Officer Brian Cornell told reporters.

While foot traffic at Target stores rose 4.6%, Walmart said on Tuesday it saw a 14% decline.

On the whole, shoppers are also generally shopping less frequently but purchasing more in one trip to the store.

“Target’s digital offer is working in tandem with their fleet of 1,900 stores and shows that the multichannel mojo is a strategic positive in the battle vs. Amazon and Walmart,” Evercore analyst Greg Melich said.

In the second quarter ended on Aug. 1, Target’s apparel sales grew by double-digits after a 20% first-quarter drop, with electronics sales up more than 70%. The retailer also echoed bigger rival Walmart as well as department store chain Kohl’s Corp in describing the start to the back-to-school season as slow because of uncertainty around when students would go back to classrooms. In response, it will extend back-to-school offerings, it said.

Reuters